Evaluating Global Medical REIT Inc. 7.50% CUM PFD A as a High-Yield Dividend Play in a Rising Rate Environment

For income-focused investors navigating a rising rate environment, Global Medical REIT Inc.’s 7.50% Cumulative Preferred Series A (GMRE.PRA) presents a compelling yet complex case. With a forward yield of 7.45% and a current market price of $25.10 as of September 3, 2025, the security offers a high-yield proposition in a market where traditional fixed-income alternatives struggle to keep pace with inflation [2]. However, the sustainability of this yield—and the broader risk-reward profile—requires a nuanced analysis of the company’s financial health, refinancing challenges, and redemption features.

Yield Attraction and Dividend Sustainability

The 7.50% CUM PFD A’s quarterly dividend of $0.4688 per share translates to a forward yield that outpaces most investment-grade preferred shares and high-yield bonds. This is supported by the company’s recent declaration of the third-quarter dividend, payable on October 31, 2025, to shareholders of record as of October 15 [1]. While the common stock dividend was slashed by 33% in Q2 2025 to preserve liquidity, the preferred dividend remains untouched, underscoring management’s prioritization of senior claims [4].

However, the company’s ability to sustain this payout hinges on its capacity to manage leverage and refinance debt. As of June 2025, Global Medical REIT reported a debt-to-EBITDA ratio of 6x and a leverage ratio of 47.2%, slightly above its target of sub-40% [1]. The firm is actively pursuing $350 million in debt refinancing by year-end, aiming to reduce leverage and align with covenants. Success here would bolster confidence in dividend sustainability, but failure could force further cuts or asset sales.

Rising Rate Risks and Redemption Features

The preferred stock’s redemption features add another layer of complexity. GMRE.PRA is redeemable at $25.00 per share, with the company holding the right to call the shares at any time after the September 15, 2022, call date [3]. In a rising rate environment, the company may be incentivized to redeem the shares if refinancing at lower costs becomes viable—a scenario that could pressure the stock’s price and limit capital appreciation.

This risk is amplified by the company’s debt structure: its $713 million in total debt carries a weighted average interest rate of 4.09% and an average remaining term of just 1.6 years [1]. With refinancing expected to occur at higher rates in 2026, interest expenses could rise significantly, potentially straining cash flow and dividend coverage. While the preferred stock’s fixed 7.50% dividend offers some insulation, the company’s elevated leverage and refinancing needs introduce uncertainty.

Credit Risk and Portfolio Resilience

Though Global Medical REIT has not disclosed its current credit ratings from S&P, Moody’s, or Fitch, its operational metrics suggest a mixed picture. The company’s portfolio is 94.5% occupied, with weighted average lease terms of 5.6 years and annual rent escalations of 2.1% [1]. These factors provide stable cash flows, particularly in mission-critical healthcare facilities, which are less sensitive to economic downturns.

Yet, the absence of explicit credit ratings and the broader industry’s rising default risk—U.S. corporate default risk hit 9.2% as of late 2024 [3]—highlight systemic challenges. For preferred shareholders, the key question is whether the company’s capital recycling strategy—selling lower-yielding assets to fund high-yield acquisitions—can offset refinancing headwinds and maintain dividend coverage.

Risk-Reward Considerations for Income Investors

The 7.50% CUM PFD A’s yield is undeniably attractive, but its risk profile demands careful scrutiny. On the positive side, the stock’s cumulative dividend feature ensures arrears are paid before common shareholders, and its liquidation preference of $25.00 per share provides a baseline for recovery in distress scenarios [3]. Additionally, the company’s focus on healthcare real estate—a sector with structural demand—offers some resilience.

Conversely, the stock’s high yield reflects elevated risk. The company’s recent dividend cut for common shares, coupled with its elevated leverage, signals financial stress. Moreover, the lack of a stated redemption timeline means investors must contend with the possibility of a call if refinancing succeeds. For conservative income investors, this trade-off may be acceptable, but it requires a tolerance for volatility and a close watch on the company’s refinancing progress.

Conclusion

Global Medical REIT Inc.’s 7.50% CUM PFD A offers a high-yield opportunity for income investors willing to navigate a complex risk landscape. The stock’s 7.45% forward yield and cumulative dividend structure are compelling, but its sustainability depends on the company’s ability to execute its refinancing plans and manage leverage. In a rising rate environment, the preferred stock’s redemption features and the company’s debt maturity profile introduce both upside and downside risks. For those who prioritize yield over capital preservation and are comfortable with active management of their holdings, GMRE.PRA could be a strategic addition to a diversified portfolio—provided they monitor the company’s financial trajectory closely.

**Source:[1] Global Medical REIT Announces Second Quarter 2025 Financial Results [https://investors.globalmedicalreit.com/news-events/press-releases/detail/159/global-medical-reit-announces-second-quarter-2025-financial][2] Global Medical REIT Inc. 7.5% Cum. Redeem. Pfd. Series A [https://www.barrons.com/market-data/stocks/gmre.pra][3] US firms' default risk hits 9.2%, a post-financial crisis high [https://www.moodys.com/web/en/us/insights/data-stories/us-corporate-default-risk-in-2025.html][4] Global Medical REIT's Q2 2025: Key Contradictions in Capital Strategy, Leverage, and Dividend Sustainability [https://www.ainvest.com/news/global-medical-reit-q2-2025-key-contradictions-capital-strategy-leverage-dividend-sustainability-2508/]